France: Digital services tax to be paid in December 2020; no response from USTR

France: Digital services tax to be paid December 2020

The Minister of Finance, Bruno Le Maire, announced that payments of the French digital services tax for 2020 will be required in December 2020.

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In February 2020, pending the outcome of the OECD's work on reforming international tax rules, the Ministry of Finance postponed the payment of installments of the digital services tax—installments that otherwise would have been paid in April and October 2020. No late payment interest or penalties were to be imposed with regard to these two installments. These installments, thus, could be replaced with the remittance of a single payment in December 2020. The Minister of Finance confirmed that the digital services tax for 2020 is to be paid in December 2020 (including the April and October installments that had been suspended).

The Office of the U.S. Trade Representative (USTR) previously concluded in a Section 301 investigation that the French digital services tax discriminated against U.S. companies, was inconsistent with prevailing principles of international tax policy, and was unusually burdensome for affected U.S. companies. Accordingly, the USTR announced Section 301 tariffs of 25% in response to the French tax. The U.S. tariffs, however, were deferred as if the digital services tax had not been implemented.

It is now a possibility that the Section 301 tariffs on French goods could be triggered in response to the announcement concerning collection of the digital services tax. These tariffs primarily target French luxury goods including make-up and handbags. As of 3:00 pm EST on October 19, 2020, there was not yet a response from the USTR.


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